Emergent Capital, Inc. Announces First Quarter 2020 Results

Company Reports Book Value of $0.34 per Share

BOCA RATON, FL / ACCESSWIRE / April 20, 2020 / Emergent Capital, Inc. (OTCQX: EMGC) ("Emergent" or the "Company"), today reported its financial results for the first quarter of 2020.

First Quarter 2020 and Recent Highlights

  • Total Income from continuing operations was $18.8 million as compared to a loss of $33.9 million in the prior year quarter;
  • Net income from continuing operations was $12.5 million, or $0.07 per diluted share, as compared to a net loss from continuing operations of $37.5 million, or $0.24 loss per diluted share in the prior year quarter;
  • Emergent's 27.5% equity investment in White Eagle Portfolio had nine policy maturities with a face value of approximately $46.9 million, gain on maturity of $23.8 million, average age at maturity of 88.4 years with an average LE of 44 months or 3.7 years;
  • Emergent settled with Sun Life for $36.1 million related to 31 life insurance policies with face values totaling $163.5 million;
  • Emergent redeemed $8.0 million principal of the 5.0% Convertible Notes in exchange for cash consideration of $4.8 million inclusive of unpaid interest; and
  • White Eagle Portfolio to date during the second quarter of 2020, has had seven policy maturities totaling $28.9 million through April 20, 2020.

White Eagle Portfolio Highlights

   Three Months Ended February 29, 2020 
   (in thousands) 
Life insurance policies owned    524 
Face value of life settlements  2,453,152 
Average age of insured    85.5 
Average life expectancy of insured    6.8 
Average death benefit per policy  4,682 
Average annual premium per policy  194 
Average monthly premium per policy  16.2 
        

"Our investment assets performed well in the first quarter providing Emergent with a strong foundation to build on in 2020,"

said Pat Curry, Emergent's Chairman and Chief Executive Officer. "With nine policy maturities that yielded an aggregate benefit of $46.9 million, the first quarter of 2020 was the most active quarter in the history of Emergent and the White Eagle portfolio. Thus far, our second quarter for 2020, which ends May 31st, has seven policy maturities totaling $28.9 million. We are actively working to maximize the return of our 27.5% equity investment in the White Eagle Portfolio and closely evaluating how the impact of the COVID-19 Pandemic will affect how we value and report our investment assets. Our portfolio is highly concentrated geographically, with the last known location of more than 60% of insureds believed to be in New York, California and Florida, three states that have been hardest hit by the current pandemic. As of the end of the first quarter, the portfolio had an average insured age of 85.5 years and an average life expectancy of 6.8 years across the 524 policies in the portfolio, and it is likely that the level of maturities will accelerate over time as the gap between average age and expectancy narrows."

First Quarter 2020 Financial Results Summary

  • Income from continuing operations was $18.8 million, an increase of $52.7 million from the prior year quarter, primarily driven by:
    • $11.4 million Sun Life settlement;
    • $2.0 million distribution from the investment in the limited partnership;
    • $5.4 million change in the fair value of the investment limited partnership; and
    • $33.9 million reduction in change in fair value loss of deconsolidated subsidiaries included in prior year
  • Total expense from continuing operations was $3.9 million, a slight increase of $338,000 from the prior year quarter, primarily due to:
    • $2.8 million gain on extinguishment of the Convertible Notes; and
    • $3.5 million increase in SG&A expenses attributable in part to one time executive retention agreements and legal and professional fees.
  • Net income from continuing operations of $12.5 million, or 0.07 per diluted share, for the three months ended February 29, 2020, compared to a net loss from continuing operations of $37.5 million, or $0.24 loss per diluted share for the three months ended February 28, 2019.

Investment in Limited Partnership Quarterly Highlights:

  • For the first quarter of fiscal period 2020, Emergent's 27.5% equity investment in White Eagle resulted in a fair value of approximately $143.2 million;
  • The portfolio experienced nine maturities with aggregate face value of approximately $46.9 million, gain on maturity of $23.8 million, weighted average age of 88.4 years and weighted average life expectancy of 3.7 years. The ratio of realized gain to face value was approximately 51%;
  • The premium/expense reserve account received approximately $26.9 million from the collection account coming from maturity proceeds collected;
  • $26.2 million was distributed from the premium/expense reserve as follows:
    • $22.5 million was utilized to pay premiums;
    • $1.8 million was used to pay facility-related expenses; and
    • $2.0 million was utilized for distribution to Emergent to satisfy the requirement of the Class B monthly distribution.

About Emergent Capital, Inc.

Emergent (OTCQX: EMGC) is a specialty finance company that invests in life settlements. More information about Emergent can be found at www.emergentcapital.com.

Safe Harbor Statement

This press release may contain certain "forward-looking statements" relating to the business of Emergent Capital, Inc. and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, and involve known and unknown risks and uncertainties. Although Emergent believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required under the securities laws, Emergent does not assume a duty to update these forward-looking statements.

Company Contact:

Investor Relations
Rob Fink
FNK IR
646.809.4048
IR@emergentcapital.com
www.emergentcapital.com


SELECTED FINANCIAL TABLES FOLLOW

Emergent Capital, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS

   Three Months Ended February 29,    Three Months Ended February 28, 
   2020    2019 
   (in thousands, except share and per share data) 
Income    
Change in fair value of life settlements  -    2 
Change in fair value of investment in limited partnership, net of distributions    7,351      - 
Change in fair value of investment in deconsolidated subsidiaries    -      (33,965)
Gain on life settlements, net    743      - 
Other income    10,716      46 
Total income (loss)    18,810      (33,917)  
Expenses               
Interest expense    2,394      2,763 
Extinguishment of debt    (2,815)    - 
Personnel costs    1,954      169 
Legal fees    909      (5)
Professional fees    857      335 
Insurance    317      179 
Other selling, general and administrative expenses    264      101 
Total expenses (income)    3,880      3,542 
Income (loss) from continuing operations before income taxes    14,930      (37,459)
Provision (benefit) for income taxes    2,428      - 
Net income (loss) from continuing operations  12,502    (37,459)
Discontinued Operations:               
Income (loss) from discontinued operations, net of income taxes    (64)    (17)
Provision (benefit) for income taxes    -      - 
Net income (loss)from discontinued operations    (64)      (17 )
Net income (loss)  12,438    (37,476 
Income (loss) per share:               
Basic income (loss) per share               
Continuing operations  0.08    (0.24)
Discontinued operations  -    - 
Net income (loss) - basic  0.08    (0.24)
Diluted (loss) income per share               
Continuing operations  0.07    (0.24)
Discontinued operations  -    - 
Net income (loss) - diluted  0.07    (0.24)  
Weighted average shares outstanding:               
Basic    157,568,811      156,919,099 
Diluted    199,922,673      156,919,099 

Emergent Capital, Inc.
CONSOLIDATED BALANCE SHEETS

   February 29,
2020
    November 30, 2019* 
   (Unaudited)      
   (In thousands except share data) 
ASSETS         
Assets         
Cash and cash equivalents  25,117    24,283 
Certificates of deposit    513      511 
Prepaid expenses and other assets    2,381      377 
Operating lease asset    125      - 
Deposits - other    1,377      1,377 
Life settlements, at estimated fair value    -      1,297 
Fixed assets, net    12      18 
Investment in limited partnership, at estimated fair value    143,201      137,849 
Total assets  172,726    165,712 
LIABILITIES AND STOCKHOLDERS' DEFICIT/EQUITY               
Liabilities               
Accounts payable and accrued expenses  1,623    1,651 
Other liabilities    40      86 
Operating lease liability    133      - 
Interest payable - 5.0% Convertible Notes    159      1,116 
5.0% Convertible Notes, net of discount and deferred debt costs    63,779      71,022 
Interest payable - 8.5% Senior Secured Notes    854      854 
8.5% Senior Secured Notes, net of deferred debt costs    45,933      45,675 
Current tax liability    5,623      3,195 
Total liabilities    118,144      123,599 
Commitments and Contingencies               
Stockholders' Deficit/Equity               
Common stock (par value $0.01 per share, 415,000,000 authorized at February 29,2020 and November 30, 2019; 159,277,966 issued and 158,669,966 outstanding as of February 29, 2020; 158,365,275 issued and 157,757,275 outstanding as of November 30, 2019)    1,593      1,584 
Preferred stock (par value $0.01 per share, 40,000,000 authorized; 0 issued and outstanding as of February 29, 2020 and November 30, 2019)    -      - 
Treasury Stock, net of issuance cost (608,000 shares as of February 29, 2020 and November 30, 2019)    (2,534)    (2,534)
Additional paid-in-capital    334,598      334,576 
Accumulated deficit    (279,075)    (291,513)
Total stockholders' deficit/equity    54,582      42,113 
Total liabilities and stockholders' deficit/equity  172,726    165,712 

* Derived from audited consolidated financial statements.

SOURCE: Emergent Capital, Inc. 



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